This discussion is intended to assist an understanding of the Company's financial condition and results of operations. This analysis should be read in conjunction with the consolidated financial statements and related notes appearing in Item 1 of the September 30, 2009, Form 10-Q, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," appearing in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2008.

Forward-Looking Information

Certain statements contained in this Quarterly Report on Form 10-Q, which are not historical facts, are forward-looking in nature and relate to trends and events that may affect the Company's future financial position and operating results. In addition, the Company, through its senior management, from time to time makes forward-looking public statements concerning its expected future operations and performance and other developments. All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms "expect," "anticipates," "intend" and "project" and similar words or expression are intended to identify forward-looking statements. In addition to risks and uncertainties that may affect operations, performance, growth projections and the results of the Company's business, which include, but are not limited to, fluctuations in the economy, the relative strength and weakness in the commercial and consumer sector and in the real estate market, the actions taken by the Federal Reserve Board for the purpose of managing the economy, interest rate movements, the impact of competitive products, services and pricing, timely development by the Company of technology enhancements for its products and operating systems, legislation and similar matters, the Company's future operations, performance, growth projections and results will depend on its ability to respond to the challenges associated with a weakening economy, particularly in real estate development, which is prominent in the Company's primary market. Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Prospective investors are cautioned that any such forward-looking statements are not guaranties of future performance, involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. The Company makes no commitment to update any forward-looking statement or to disclose any facts, events or circumstances that may affect the accuracy of any forward-looking statement.

Going Concern Issues

Florida Community Bank is experiencing the effects of what many consider to be the worst economic downturn since the Great Depression. The effects of the current environment are being felt across many industries, with residential and commercial real estate being hit particularly hard in Southwest Florida. The Bank, with a portfolio of loans primarily secured by real estate, has seen a rapid and incredible decline in the value of the collateral securing our loan portfolio. Coupled with rising unemployment, Southwest Florida has seen the foreclosure rates skyrocket to one the highest levels in the country, and it continues to be a big problem for the Bank, as it tries to sell foreclosed properties at a price that it can afford to. The decline in real estate values in 2008 and through the first nine months of 2009 has contributed to the high level of charge-offs and the significant increase in the provision for credit losses, resulting in net losses of $76.2 million in 2008 and $30.6 million for the first nine months of 2009. These losses have severely depleted the Bank's capital. We cannot predict when the real estate economy will turn and improve and we cannot assure you that we will be able to return to being profitable again in the near future, or even at all.
We know however that if the Bank's financial condition continues to deteriorate we will become critically undercapitalized which will require significantly more capital to bring us back to the point where we can be profitable again. Raising capital in this economic climate is and will be extremely challenging and there is no assurance that the Company will succeed in this endeavor. If the Company can not raise sufficient capital to be able to comply with the Order, the regulators may take additional enforcement action against the Company and the Bank.

As stated above, it remains to be seen if the Company and the Bank will be successful, either on a short-term or long-term basis. In addition, it is unclear at this time what impact, if any, the interest rate restrictions included in the Order will have on the Bank's ability to maintain adequate liquidity. As a result of our financial condition, our regulators are continually monitoring our liquidity and capital adequacy. Based on their assessment of our ability to continue to operate in a safe and sound manner, our regulators at any time may take other and further actions, including placing the Bank into conservatorship or receivership, to protect the interests of depositors insured by the FDIC.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future, and do not include any adjustments to reflect the possible future effects on the recoverability or classification of assets, and the amounts or classifications of liabilities that may result from the outcome of any regulatory action, which would affect our ability to continue as a going concern.

FINANCIAL CONDITION

September 30, 2009 compared to December 31, 2008

The Bank has continued to originate loans in Southwest Florida, albeit at a much slower pace than in prior years; affected by the worst real estate economy that this part of Florida has ever experienced. As discussed more fully below, loans decreased 8.71% during the first nine months of 2009, while equity capital declined by 140.41%. While management continues to be proactive in recognizing the losses in the bank's loan portfolio and trying to reduce the high level of non-performing assets on the books, its top priority is trying to raise capital.

Loans

Loans comprised the largest single category of the Company's earning assets on September 30, 2009. Loans, net of unearned income, totaled 65.00% of total assets at September 30, 2009 compared to 65.39% of total assets at December 31, 2008. During the first nine months of 2009, the bank originated approximately $29 million in new loans compared to approximately $77 million during the same time period last year. Over the first nine months of 2009, loans decreased approximately $54.4 million, compared to the decrease of approximately $105.6 million during the same time period last year. Approximately $47 million of the decrease in 2009 was due to nonperforming loans that were either charged-off and or transferred to the other real estate owned category. Management expects that this trend will continue, that the loan portfolio will continue to decrease as loans are transferred over to the other real estate owned category. At some point however management expects that the financing of other real estate sales will slow or stop the decline in the portfolio.

As of September, 30, 2009, commercial real estate loans comprised approximately 74% of the loan portfolio, about the same as it was at the end of 2008.

As part of the Cease and Desist Order, the Bank was required to reduce its concentration in commercial real estate loans. The Bank has reduced the commercial real estate loans by approximately $70.7 million or 14.03% from December 31, 2008; the reduction was mostly through charge-offs.

Investment Securities and Other Earning Assets

The investment securities portfolio is used to provide a source of liquidity, to serve as collateral for borrowings and to secure certain government deposits. Federal funds sold and other interest-bearing deposits held for liquidity purposes increased by $65.6 million during the first nine months of 2009 and totaled approximately $100.3 million at September 30, 2009; they are the most liquid earning asset and is used to manage the daily cash position of the Company. Management increased the bank's liquidity position by restructuring the securities portfolio, selling approximately $173 million and only purchasing $117 million to cover what was needed for collateral purposes. In the restructuring we sold our Fannie, Freddie and Municipal securities that had a 20% risk-weighting and purchased Ginnie Mae and SBA securities that are 100% guaranteed by the U.S. government and 0% risk-weighted. Additional liquidity came from income tax refunds totaling approximately $29 million. Investment securities and other investment securities totaled $121.9 million at September 30, 2009.

Asset Quality

From December 31, 2008 to September 30, 2009, the Bank's asset quality continued to deteriorate as measured by three key ratios. The ratio of loan loss allowance to total nonperforming assets (defined as non-accrual loans, loans past due 90 days or greater, restructured loans, non-accruing securities, and other real estate) deteriorated, decreasing from 17.11% to 12.80%. The percentage of nonperforming assets to total assets went up, increasing from 22.26% to 32.61%, and the percentage of nonperforming loans to total loans increased from 25.72% to 35.19%. Construction, and land and development loans make up the majority of the Bank's nonperforming assets. During the first nine months of 2009, nonperforming loans increased by $87.7 million; of that total, $33.2 million was transferred to other real estate owned property and $14.5 million was charged-off for a net increase of $40 million; nonperforming loans totaled $192.1 million at September 30, 2009. Other real estate owned property increased by $33.4 million (net of sales and writedowns) to approximately $85.4 million. Management attributes the increase in nonperforming loans to the depressed real estate economy; real estate prices continue to decline in certain areas and the local unemployment rate continues to rise, up 4% from a year ago to 12.7%, which is 1.8% higher than the state average and 2.9% higher than the national average. The high number of foreclosures in the area has continued to "back up" in the court system's which has significantly slowed the foreclosure process down, increasing the number of nonperforming loans on the Bank's books and increasing all the costs related to that process. A "special assets" management team was established to handle these loans. Each nonperforming loan is evaluated for impairment and written down to its net realizable value or a specific reserve is established in the allowance for loan losses if necessary. Management believes that all the known losses in these loans have been recognized, however due to the uncertain economy, future losses may still be likely.

During the first nine months of 2009, net charge-offs totaled $14.1 million.

The following table sets forth certain information with respect to the Bank's loans, net of unearned income, and the allowance for loan losses for the last four years ended December 31, 2008.

                        Summary of Loan Loss Experience

                                     September
                                      30, 2009       December  31, 2008       December  31, 2007       December 31, 2006       December  31, 2005
                                                                                (Dollars in thousands)

Allowance for loan losses at
beginning of year                    $   36,390     $             18,309     $             13,590     $            11,523     $              9,791
Loans charged off:
Commercial, financial and
agricultural                                433                    1,475                      734                      35                      131
Real estate - mortgage                   14,014                   49,548                    1,485                     118                        -
Consumer                                     80                      193                      122                     111                       50
Total loans charged off                  14,527                   51,216                    2,341                     264                      181

Recoveries on loans previously
charged off:
Commercial, financial and
agricultural                                205                      123                        9                       6                       24
Real estate - mortgage                      206                       28                      139                       -                        2
Consumer                                     12                       16                       44                      29                      125
Total recoveries                            423                      167                      192                      35                      151

Net loans charged off (recovered)        14,104                   51,049                    2,149                     229                       30

Provision for loan losses                14,330                   69,130                    6,868                   2,296                    1,762

Allowance for loan losses at end
of period                            $   36,616     $             36,390     $             18,309     $            13,590     $             11,523

Loans, net of unearned income, at
end of period                        $  570,101     $            624,478     $            761,431     $           869,608     $            791,609

Average loans, net of unearned
income, outstanding for the period      588,613                  701,334                  812,603                 876,604                  670,885

Ratio of net charge-offs to net
average loans                              2.40 %                   7.28 %                   0.26 %                  0.03 %                   0.00 %

In evaluating the allowance, management also considers the historical loan loss experience of the Bank, the amount of past due and nonperforming loans, current and anticipated economic conditions, lender requirements and other appropriate information.

As part of the October 2008 Order, the Bank had to report the balance of assets that were classified as "substandard", "doubtful" and "loss" as a percentage of total Tier 1 capital plus allowance for loan losses. The following table reflects the assets that were classified (1) by the Bank at September 30, 2009 and December 31, 2008.

                                                          Percentage of                      Percentage of
                                                             Tier 1                             Tier 1
                                                          Capital Plus                       Capital Plus
             Loan Analysis                 9/30/2009          ALLL           12/31/2008          ALLL
Substandard                                $  138,457            239.72 %   $    199,330            233.91 %
Doubtful                                        2,696              4.67 %          6,577              7.72 %
Loss                                                -              0.00 %              -              0.00 %
Total                                      $  141,153            244.39 %   $    205,907            241.62 %

Tier 1 Capital                             $   21,142                       $     48,828
Allowance for loan losses (ALLL)               36,616                             36,390
Total                                      $   57,758                       $     85,218

As part of the Order, the Bank was given 120 days (by 2/15/2009) to reduce the classified assets down to 130% of Tier 1 capital and the allowance for loan losses; 210 days (by 5/15/2009) to reduce the percentage down to 100% and 360 days (10/12/2009) to get it down to 60%.

Reducing the classified assets has proven to be a difficult task in this "depressed" real estate economy. Management cannot afford to take any further losses to sell the assets, as its capital levels have already been depleted by charge-offs and writedowns. Attracting and getting new capital seems to be the only viable means to reduce this ratio and get it to the level that the Order requires. Management has kept the regulators informed of their difficulties in reducing the classified assets.

(1) The total amount of classified assets is higher, but under the Order we are only required to measure the assets that were actually classified at the time of the OFR report. Total classified assets at September 30, 2009, was $354 million or 613% of Tier 1 capital and the allowance for loan losses, compared to $288.7 million or 333.14% at December 31, 2008.

Deposits

Total deposits of $794.9 million at September 30, 2009, represented a decrease of $50.5 million (5.97%) from total deposits of $845.4 million at year-end 2008. The decrease in deposits is as a result of management shrinking the Bank. Brokered deposits were reduced by $100.7 million, while core certificate of deposits increased by $61.4 million, money market, savings and now accounts increased by $1.4 million; noninterest checking decreased $12.6 million. At September 30, 2009, brokered certificates of deposit totaled approximately $252.3 million; management will continue to let the brokered deposits runoff as they shrink deposits and the size of the Bank.

As part of the Cease and Desist Order, the Bank has reduced brokered deposits from approximately $353 million and 42% of total deposits at December 31, 2008, down to approximately $252 million and 32% of total deposits. It was able to do this from two sources, $29 million in income tax refunds and from the excess funds generated from the sale of securities. Further reductions are projected to come from the sale of nonperforming assets.

Shareholders' Equity

Shareholders' equity decreased $29.1 million from December 31, 2008 to September 30, 2009, due to a net loss of approximately $30.6 million in earnings. The Company's capital position at September 30, 2009 was negative $8.8 million. Unrealized losses on investments totaled $337 thousand at September 30, 2009. The Company is critically undercapitalized at this point in time.

Liquidity Management

Liquidity is defined as the ability of a company to convert assets (by liquidating or pledging for borrowings) into cash or cash equivalents without significant loss. Liquidity management involves maintaining the ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the production and growth needs of the communities it serves.

The primary function of asset and liability management is not only to ensure adequate liquidity in order to meet the needs of its customer base, but also to maintain an appropriate balance between interest-sensitive assets and interest-sensitive liabilities so that the Company can also meet the investment requirements of its shareholders. Daily monitoring of the sources and uses of funds is necessary to maintain an acceptable position that meets both requirements. To the Company, both assets and liabilities are considered sources of liquidity funding and both are, therefore, monitored on a daily basis.

The asset portion of the balance sheet provides liquidity primarily through maturities and the repayment of loan and investment principal. Loans that mature in one year or less equaled approximately $167 million at September 30, 2009, and there are approximately $10 million of investment security payments expected within one year. At September 30, 2009, the Bank had excess cash of approximately $99.4 million in interest bearing accounts at the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of Atlanta and $562 thousand in Federal Funds Sold through a correspondent bank.

The liability portion of the balance sheet provides liquidity through deposits to various customers' interest-bearing and non-interest-bearing deposit accounts, and through the capacity to borrow short-term overnight funds from our correspondent banks. The Bank's main correspondent credit line was with Silverton Bank which was cancelled after the bank was put into receivership by the OCC on May 1, 2009; the Bank's has a $15 million line with another other correspondent bank. The Bank also had the capacity to borrow on an overnight basis up to $5 million from the Federal Reserve Bank of Atlanta. During the second quarter, the Bank's credit line with the Federal Home Loan Bank of Atlanta ('FHLB') was cancelled due to the Bank's deteriorating financial condition; the Bank has $50 million in advances from the FHLB and can continue to borrow up to that amount. All the Bank's credit lines are secured by either securities or loans.

The Bank has so far not had a problem raising deposits, however its ability to continue to attract deposits may be restricted by the interest rates restrictions placed on the Bank by the FDIC. The maximum rate that the Bank is currently permitted to offer is 75 basis points over the average local rate, as calculated by RateWatch. This does not mean that the Bank's rates will not be competitive, but the Bank can no longer go out and pay the highest rate in area to attract deposits.

Capital Resources

A strong capital position is vital to the continued profitability of the Company and the Bank because it promotes depositor and investor confidence and provides a solid foundation for the future growth of the organization. In the past, the Company provided a significant portion of its capital requirements through the retention of earnings, but with significant losses in 2008 and the continued losses in 2009, the Company's capital strength has been weakened to the point where there is no more capital.

On June 21, 2002, FCBI Capital Trust I ("Trust I"), a Delaware statutory trust established by the Company, received $10,000,000 in proceeds in exchange for $10,000,000 principal amount of Trust I floating rate cumulative trust preferred securities (the "preferred securities") in a trust preferred private placement. On May 12, 2006, FCBI Capital Trust II ("Trust II") was established also as a Delaware statutory trust. Trust II received $20,000,000 in similar proceeds. The proceeds of both transactions were then used by the trusts to purchase an equal amount of floating rate subordinated debentures (the "subordinated debentures") of the Company. The Company has fully and unconditionally guaranteed all obligations of the trusts on a subordinated basis with respect to the preferred securities. Subject to certain limitations, the preferred securities qualify as Tier 1 capital and are presented in the Consolidated Statements of Financial Condition as subordinated debentures. The sole assets of the trusts are the subordinated debentures issued by the Company. Both the preferred securities of the trusts and the subordinated debentures of the Company have approximately 30-year lives. However, both the Company and the trusts have call options of five years, subject to regulatory capital requirements. In December 2008, the Company elected to defer the interest payments as allowed under the agreement to conserve cash. Payments maybe deferred for up to 20 quarters, but the interest will continue to be accrued every month.

Regulatory authorities are placing increased emphasis on the maintenance of adequate capital. In 1990, new risk-based capital requirements became effective. The guidelines take into consideration risk factors, as defined by regulators, associated with various categories of assets, both on and off the balance sheet. Under the guidelines, capital strength is measured in two tiers, which are used in conjunction with risk-adjusted assets to determine the risk-based capital ratios. The Company's Tier I capital was ($8.5) million, which consisted of just common equity. With negative common equity, the Trust Preferred securities and the allowance for loan losses do not qualify as capital components therefore the Company's Total Risk-Based capital was the same as the Tier 1, ($8.5) million.

RESULTS OF OPERATIONS

Three months ended September 30, 2009 and 2008

Summary

The Company had a net loss for the three months ended September 30, 2009, totaling $19,696,483 compared to a net loss of $18,973,448 for the same period in 2008, representing a 3.81% decrease. The difference was due to several factors: $5 million decrease in net interest income; $2.1 million increase in non-interest expenses; no income tax benefit (of $12 million); which was all offset by a lower loan loss provision ($18.3 million).

Net Interest Income

Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of the Company's net income. Net interest income during the three months ended September 30, 2009, decreased $5.01 million (116.7%) from the same period in 2008. This decrease was due primarily to lower loan balances and the reversal of interest on non-performing loans, resulting in a $4.4 million reduction (44.9%) in loan income. Interest expense on deposits decreased $719 thousand or 9.8%, due primarily to the decrease in (brokered) certificate of deposits and lower rates.

Earning assets averaged $804.5 million during the third quarter of 2009 compared to $906 million in 2008, with the decrease due primarily to loans, which were down $96 million or approximately 14%; securities which were down $98.6 million, but this decrease was basically offset by an increase in excess cash of $95 million. Average interest-bearing liabilities increased from $843 million during the third quarter of 2008 to $864.3 million during the same period in 2009. Average interest bearing accounts (money market, savings and NOW accounts) were $37 million lower in 2009 compared to the third quarter of 2008 reflecting a decrease of 20.1%; average certificates of deposit increased $62.4 million, reflecting an increase of 10.9%; average short-term borrowing (fed funds purchased) was $4.1 million lower in 2009 compared to the same period in 2008.

The Bank, usually in an asset sensitive position with a larger dollar amount of interest-earning assets subject to re-pricing than interest-bearing liabilities, is currently in a liability sensitive position. The increase in nonaccrual loans has significantly reduced the amount of interest earning assets subject to changes in interest rates. In this current rate environment, the Bank is in a favorable position for re-pricing its liabilities lower. During periods when interest rates are increasing the Bank strives to increase its asset sensitivity to take advantage of the rising rates to increase its net interest margin; when rates have stabilized, the Bank will decrease its asset sensitivity so that if . . .